CAMBODIA

Contribution to the2015 United Nations Economic and Social Council

(ECOSOC)Integration Segment

Guidance Questions on "2015 ECOSOC Integration Segment:Achieving sustainable development through employment

creation and decent work for all"

Qt: How has yo,r government used labour market policies, incInding wage policies, to helpreduce economic and social inequalities?

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Cambodia has experienced remarkable socio-economie progress, and accompemied byimpressive average annual growth rate of 7% and notable achievements in povertya!Ieÿ:iation during the Rectangular Strategy (RS).Phase II (2008-2013). The percentage bfworkers engaged in agriculture in the total employment has beet reducing rapidly, andcorrespondingly, the share of employment in the non-farm sectors have been rising.implies that (relatively moreproductive) jobs are being created outside the non-farm sectors,to wtfich surplus workers in agriculture are migraNng. Through the success of KS Phase iI,the Royal Government of Cambodia (RGC) launched its RS Phase III (2014-2018) inSeptelmber 20!3. Within the framework of this strategy, employment is an integral theme ofectangIe III on "Private Sector DeveloPment and Employment'f, land rectangle IV on

"Capadty Building and Human Resource Development" in areas that allows :Cambodiantoe0ple to be employable, productive and competitive. In additionto this, National strategyDeveIoPmeÿt Plan (NSDP) 2014-18 was implemented as the key medium term nationaldevelopment plan, and served as the main t0o! for the operationalization of it he- . . : - .g0vemmerÿt's RS. : ...... : .

Respective to this high priority agenda of the government policy platform, Ministry ofLabour mid Vocdtional Training. (MoLVT) has drafted the National Employment Policy,which will be finalized in 2015. One of the underlying intentions of this policy is to bringtogether the current policies and institutions that matter for the labour market into a Singlecoherent framework and to continue with the deve!opment0f relevant labour marketinstitutions in order to promote decent work and to improve Outcomes in the labour market.

The RGC has also considered the minimum wage as a tool to protect workers againstunduly low wage and to help reduce economic and social hÿequalities. Hence, in Iine withMinimum Wage FLxing Recommendation of ILO 1970 (No. 135), the Cambodia's labour lawof 1997 reflects the balance between social and economic criteria when setting the level ofminimum wage. For instance in 2015, five social and economic criteria, which have beenconsidered as matters of priority for minimum wage adjustment in garment sector, include:(1) need of workers and their families (2) the cost of living and changes in prices [inflation](3) impact on enterprise by considering labour productivity, enterprises' revenue and theLrability to pay (4) impact on the competitiveness of Cambodia compared to other countries inthe region (5) impact on the labour market and employment. As the result, the minimumwage (exclude other fringe benefits) in garment sector increases by 28% from USD!00dollars per month in 2014 to USD128 do!lars in 2015.

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The RGC has trade-offs to be made within pubiic policy priorities to promote fullemploymenL and decent work for all Such trade-offs are to bring the key aspects of the labor OS"

Q3: What kind of trade offs has your government encountered in the protnotion of fntlemployment and decent work for all? What can be done to enhance synergies betweenrespect to international labour standards and to eaviromnenta! safeguards, pro&wtivitÿdÿcompetitiveness and ehonomics growth?

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market to close aligÿ_menb in particular, ski!t availability, labor productivity, the qualiÿy andrelevancy of training in both tertiary and Vocational erairdng, high labor mobility, theprotection of worker rights and labor conditions for locM and overseas workers, theindusMal relations between workers, employees and employers, and the conÿinulng needfor improvement Ln wage setting mechanism, and to strengthen and refine policy andregalatory framework, institut!onaI capacity and coordination, . -

There is a positive relationship beÿveen promoÿ:g international labour standards and ..ig:proving productivity and competitiveness. The RGC ..has h:creased onsite Iaborh3speeÿons and .5nterventions iI: labor dispute .resolution, and provided:support tO the.Better'Faeÿ0ry Program of ILO in order to isromoÿe worker rÿgln:ts, acceptabie.w0rkingconditions ..and harmonious induSÿriM )elations between -workerS, empI0yees . and :-

employe:.st TIÿ directly links to workerg commitment to enterprise, reducing m turz:overÿ .. "" and raising their motivation and productivity. Redncÿmg in turnover means that Workers are "

able to learr,, more on the job and are more IikeIy to accept the productivity raising, while :i " . " iemployers are encouraged to find ways ÿo increase efficiency and c ompeiitiveness, : '.". . ..." i....i 1.12 i .i JQÿ: ls youth employment a major issÿ¢e ÿs yoÿir Comÿtq? .What is the proportim¢ of the .... - 'youth labourforce [aged betweez 15-24] ttiat is m¢employmetÿt in yoler toni;try? noes. yo,r -- . : .

.goÿ,eÿvm¢ent!ÿave specificp)ograim,ÿes Mrgeted at.youth employmenÿ? '" .:: .: : :":.:i '--:. " ::- :t

According to the !ast Updated data frgm Cambodia labour.force.survey 2012, 22.90'0 of ÿotaÿ : ipopulation is youth (age 15-24). The yQuth pafticiPaÿon ratio, is about 63.1%, in wNch an : i. estimated 3.8% of.f!ÿem were unemployed. In addition to this, given more than 200<000 new -:!" W0rkers enter the labour force eveÿy.yÿar; Cambodia is. and wit! be facing the chM!enges of : :.:. " ;- ::: ' - i

generating more decent jobs for young people. - " •. - .... • ..... "- ...... ' " "" : . . - . " " " . , . " . :" ; -: " " " " : " ' '. I

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. Wi .thin ÿds c0ntext, skills deveIopment..and :upg:ading, and youth employment have been: . pia;ed:0n th# !high priority agenda .6fthe .governme::; p0Hcy platform.. For. instance< The

T:. RG,ÿ "mÿpIeraented ÿe Nationa! Policy on .Cambodian Youth DeyeIopmene in 20tt as aft: :essenVigt piaÿ,ming tool guiding the county on its approach to your& dÿvelopment..Lÿ this

policy d0¢mnent.are inhexen[ .€ommitmenLÿ by government on interventions and servicesthat wouid have to be rolled out to ensure effective and efficient mainÿtreamirÿg Of y0utÿhievelopment such as their ;apacikies, sense of {esponsibiHty, vocational skitls, science

competency, Lnf0rmaÿion tecI3nology competency and positive attitudes and so on. The RGCmakh:g efforts to increase decent and productive employment 9pporÿnities through

promokiiig nÿral employment (agrlcu:ÿraI and non-agrieu!turai sector deve!opmezÿ[ in therurM areas and strengthening the .Iinkages betÿween the two sectors in the rural .areas), andtit& ygttth to these employment 0pportumties. .. . .

In addition to this, the RGC set up the National Employment Agency (NEA) iÿ the 2009 wasa key moment in providing employment< !aX,Ii and career guidance services. The keyfimctions.ofNÿA are to: -- . ..... .

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- deliver irdormation services to job seekers, employees, empIoyers, skill ÿrainingprovide:s and the public to allow them ÿo effectively interchange information openlyand provide khem the opporeaniÿes to meet one another.

- provide new ÿaduates, out-of-school youth and the unemployed with labourmarket information and training infom:ation.

- offer job placement, seÿarices, career guidance, employment counseling, teclÿnicai andvocational training connseIing, iÿformation about occupational health, workplacesafety, and ski!ls retrahaing, vAS"

'i Q5: How is your government addressing the challenges of educatioTg'skitIs and job

mismatch in your countmd, especially in the context of the transition to a sustainabledevelopment? Does your countmy have successful initiatives that link education andtraining to the world of work?

In response to the education/skills and labour market challenges, wide ranges of policyresponses have been implemented. A holistic policy framework has been puÿ in place to shiftthe skills distribtttion away from agricultural production, towards a better trained ÿorkforceand higher valtte added industries. Some of the key pillars of these policy frameworks were:

Strengthening PPP framework, which plays an important role in endorsing theformal and informal training via:

o improving workplace learning by: Legally binding (Apprenticeship) andInformal (Internskip)

o engaging the private sector and, specifically, employers' representatives, inTVET dialogues

0 setting up industrial liaison units (ILU) in all provincial training centers tointeract with the private seqtor and to discover flÿe skills demand at the locallevel. :

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Review and development of education and training curricula, training standardsand national qualifications frameworks to assist the Standardization, recognitionand certification of skills. For instance, Industrial Advisory Groups (lAGs) have beenconstituted (construction, mechanics and ICT/business) in order to review andvalidate the competence standards, and competency based curriculum.

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Cambodia National Qualification Framework, wltidÿ has been introduced in 20!3,allows every individual to acquire some skills from the formal education as well asto continue upgrade his/her:skills and move to a higher level of educati6n indifferent pathways.

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Expanding and enhancing the TVET short term programs at TVET institutions orlocal communities including post harvest program, national fund for poverty, primeminister's fund programmes, special trahting programmes, and so on in order toreduce poverty through provisions of basic skills for the rural poor.

Introducing and expanding demand-side programmes (e.g. conditional cashtransfer, vouchers, fee subsidy and scholarship, food and nutrition supplements...)with incentive design to encourage not only school attenda.nce and completion, butalso on learning outcomes. These programmes are under "education for all"framework, which aim at reducing youth dropout rate before grade 9 years.

Scaling up the bridging courses and making the TVET system more accessible,which are effective tools for youth skills development and upgrading.

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Expand_big employment services to job seekers and a broader dissemination ofinformation on job opportunities in the country and abroad to the public includingcounseling and support provided to worker recruitment through expansion of jobcenters under the National Employment Agency of the Nationa! Training Boardacross the country, wr-

Strenÿhening the employment forum mechanism coordinated by government, andin which employers, job seekers and education and training providers partlcipated,aimed at improving exchange of labor market information, counseling andresponsiveness to changing market conditions. ... :. - : . " '. :

- . Fm-ther deve!oping a sound labor market information system especially throughstrengthening data c0Hection, analysis and ctissemination Of labor, statistics, andinformation-on educagon and tedmica! and vocational ÿraining programs, and

.. ... " provid&lg "mXormati0n to the.public on wages ÿ%nd thesuppIy and demand of'skills.! -- " " ' : :: : :"- :-.- • ' ..... " :iÿ :. " ..ÿ ÿ- - - - ÿ;i " : ;: ':: ". ; : ! " " ' :: ": " :"-:.::

.. Q7: What kind of po!icy initial(yes and apldr.oacltes you.r governmeÿt hÿve to facilitate.the" transitig!ÿ i fro?ÿt • itÿorÿttal to .. fornsa! eÿl?!oyment • mid ' toÿ -- formaJÿze, and .increase

sÿtstaina.hitity Of sinalI attd micro enterprises, taking into accoiint thÿ ecoagm!c, social andbnvironmentÿl dhnension ofsustMnable development? " " i: " . ..:.. " ::. ...... i: /: 7.i: -

The prevv2ence of SMEs was ..stark .aÿmon.gst all :.deve!oping co.untr!es. However,"an' " o#erwheiming majority of. the. establishments are no.t rggÿ. terÿd witlÿ any Of ÿe .ÿelevant

- -. i. i :-:aiÿthofitieÿ.,. s.ÿs ¢!eyelgpÿnent in SMEs .is iuÿndertaken :0hi: an .hppoÿc..-ibasiÿ; .ÿith:- i: : recÿitmentÿjng p!aÿe infgrmatly aÿnongst.fi!ends.an4 fÿy, ÿnÿiÿg c0ndueted,0n:.

" : iheÿjob. Further,the informal sector is driven by low iiteracy/nuineracy skitls, and complex. regÿatory reduÿ6nÿentswith poor enforcemenÿ ÿct coÿJnimJcation. SMEs"themhelves have

, . ii. ' Iow finincM and legal J_itefady, and.;fa.ce diff!qulties ..ÿm..ac;essinginf0rmat!0n, (_eclm0!0gy. ....;anÿt financ!alsuPP0rt. " .: : :. :!i .:.:, ÿ..:- i: -" ::iÿ :".":-":- :.i! iI:. . " '":. :.- .: i::iÿ. '.

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. !n this regards, : the Strategic .objectives of the RGC :are to upgrade SMEs especially to.-. .impro;e .:huÿ!ness :;cj:knate-thrgugh enhanced-regulatory, framew0rk,, pr0aÿof!gn of' -i huÿovation.ÿnd, techn...0togy;, increa.s.ed access.to.finan;e,sÿeÿgthened and expÿded related" : support servkes, and. integrat!gn Of SMEs into gIobal value dmhÿs. The.RCG has promoted

• i..- : . :the ÿpfenÿeiÿafi0.n;::.Sf ..:.ithei;SMEs i deveI0pmÿt..ifranÿeÿyqÿ!< :-ÿhr0ugi3.:'.iÿnÿnedgovernance, .The framework is aimed at prorn0ÿg the .business enyironment.ÿyoughdeveloping industrial standards, adopting accoun.ÿg and financial report staÿ3daTds ÿo" increase S.MEs' access to finmÿce; supportLng Pri0r!ty activities with tax incentives on inputs,

and building institutionai capaciby particÿdarly with the estab!Munenÿ of ."NationalProductivity Center" and "Industrial Laboratory Center". The implementation of .thesemeasures contributes to the expansion of the industrial base including the. emergence of arange of industries including machinery assembler, electronics, spare paris manufacture,agro-pr0cessing, and other mamifactuff, ng industries. : . - : " "- :. .... '. .".

tn ptÿrsuilng this objective, ÿe Royal Goverrtment. will continue to focus On the followingpriorities: .. -i -. . ... " .. :

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- Formulating industrial development policy based on two key approaches: (1)exqpansion of industdaI base supported by increased attractiveness of Cambodia toinvestors and investment promotion including modernization of SMEs; and (2)improved co_n.nectivity with regional production networks ÿo integrate ÿvJth and'move up the global value chains,

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Preparing science and tecÿhnolog7 policy with the objective to increase researcÿh anddevelopment capability of Cambodia in responding to the projected needs ofnational development in the next higher phase, in particular ensuring consistencywith the industrial development policy and agricultural development policy as theyevolve. ÿ-

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Updating the SMEs Development Framework to be consistent with the industrialdevelopment policy aimed at enhancing SME's capacity to Ifiÿk with large enterprisesand form a ctuster while promoting entrepreneurship, productiyity, creativity,innovation and specialization through introduction and implementation of acomprehensive package Of supporting measures including clustering, enhancedtechn, ology transfer, increased access to finance, sÿengthened technical standards,establishment of busLness development colmseling centers, promotion of "onevillage one product" movement and improvement of regulatory framework as welIas sÿrengthened institutional coordination. ....

- Aligni:n_ g private sector development and invesÿnent policies with SME andindustrial development policy especially by encouraging investment in industrial

; dusters and indusÿmial parks through promoting the adoption of Law on SpecialEconomic Zones, in order to upgrade management, infrastructure and operations inthe industrial sector to international standards. :

- Human resource de,elopment especially the skill training for industrial sector: through enhanced quality of education in all areas and at all levels, especially the

reform of tertiary education, techrdcal and vocational training, giving priority to" training of engineers, tecKnicians and workers to acquire appropriate skills as

demanded by the markets with a prO-active approach using public-private Sector

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